Your read on the market trends. Look, any of these latest issues in video, China giving you pause, Brian.

Yeah. So, improvements for starters in terms of technology; we did have a very heavy weighting to a lot of technology names earlier in the year.

How about in terms of our U.S. equity portfolio? More than 50% of the portfolio was in, you know, IT and also communication services types of names. And we have seen a lot of hype build up in a lot of these tech names.

In recent months, we've adjusted and gotten a little bit more of a neutral posture at this point in time. So, you know, coming back to in-video specifically, they do seem to be still garnering the majority of economics within this capital cycle, in

this tech cycle that we're seeing at this point in time. And I think you're seeing that in terms of the power and their ability to capture the market and, you know, circle the wagons, if you will, in that sense.

With regards to China, they do have slightly reduced exposure to China than they've had in recent years and months. And I think that's because you're just seeing the overall strength in the other areas that they're selling through to

the hyperscalers and things like that. So it's now 15-16% of their revenue at this point in time. But I think this is a little bit less of an issue than maybe what we saw a couple of years ago when you saw some of those

U.S. restrictions are sort of pulling back, you know, in videos, the ability to sell them to China. So ultimately, the valuations we're still seeing in video, in excess of $3 trillion, are vindicated by the extent of the market opportunity despite

some curtailment to China, for example. Yeah. So I think you look at in video, you look at sort of the hardware implications or the technology that they have; they have a better mousetrap in terms of the GPUs that they're selling. And to folks, I think you're seeing that

in terms of the strength of their business. What I think was underappreciated was the software element of the thesis as well. That gives them a much longer tail in terms of the ability to continue to sell through that software. And the thesis pulls up the margin

structure of video over the course of time. People talk about CUDA as being that base software layer, and then these software stacks that they're building on top of this. This all creates a very system-wide approach. It's hard to disrupt, and that is really good economics for them.

And I think there's plenty of headroom for them to continue to grow on an ongoing basis. I think it gives a little more stickiness to maybe some of their peers, even within the GPU space. Interesting. Brian, take us to software

more broadly. We have seen the shift out of perhaps chip stocks, semiconductors, into the software space, thinking how generative AI is going to make their valuations suddenly even more inflated. Is that the right way to go?

Yeah.
So, in terms of software names, we've seen multiples inflate and expectations rise regarding these companies' ability to capture the economic benefits of generative AI.
I think we're still in the early stages.

I think we need to see what impacts emerge and how companies monetize generative AI. Enterprise adoption is slower and will take

some time. We see more immediate impact in advertising.  Using unstructured data to predict consumer preferences and match advertising content is showing real returns. The economics are moving in that

direction. That's our current focus and portfolio positioning. Interesting.
We've seen better performance from Alphabet as well. Brian, what was interesting about

your earlier comments was your more neutral stance.  I'm interested in whether you're allocating to other tangential industry groups beyond semiconductors and software.

posturing, I think that's the overall sort of exposure that you see in the portfolios come down. We still have higher conviction calls in then select names like Nvidia, like Meta, even like Microsoft to a little bit lesser extent. In our portfolio, you see some fairly

decent sizing in those, honestly, and as a tech show in the tech program that we're talking about. But we are seeing some more interesting areas in some of the more boring areas of the economy as well. So consumer staples to some extent,

utilities, not necessarily because they're defensive by nature, but quite frankly because they're a little bit less volatile; the multiples look more attractive and you're getting a little bit more bang for your buck, so to speak, in terms of returns.

You get high single-digit, low double-digit returns with a dividend yield on top of that for a reasonable multiple; you don't have to worry about the higher growth. So it's almost like a barbell approach,

if you will, having some of these punchier names, some of these higher conviction names within the tech ecosystem where we are seeing the economics coming through, and then you're seeing some of these other things. We can get some really good quality compounding at a reasonable price.

Risk-Reward Ratio in Tech as Geopolitical Risks Increase

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Bloomberg Technology

Market Trends and Adjustments in Technology Sector

Improvements in technology, with initial heavy weighting on technology names.

Over 50% of the U.S. equity portfolio was in IT and communication services, with significant hype in tech names.

Adjusted to a more neutral posture regarding tech investments.

In-video companies are still garnering significant economic benefits in the current tech cycle.

Reduced exposure to China due to strength in other sales areas; now 15-16% of revenue.

Analysis of Nvidia's Market Position and Software Advantages

Nvidia possesses superior GPU technology ('better mousetrap').

Underappreciated software element provides a longer sales tail and improves margin structure.

CUDA and software stacks create a system-wide approach, resistant to disruption.

Significant headroom for continued growth and increased stickiness compared to peers.

Shift from Chip Stocks to Software and Generative AI

Software multiples have inflated, with rising expectations for generative AI benefits; still in early stages.

Enterprise adoption of generative AI is slow; more immediate impact seen in advertising.

Using unstructured data to predict consumer preferences and match advertising content shows real returns.

Portfolio Allocation Strategy and Diversification

Overall portfolio exposure has decreased ('neutral' posture), but still maintains high conviction in select names (Nvidia, Meta, Microsoft).

Exploring opportunities in less volatile sectors like consumer staples and utilities.

Utilities offer attractive multiples, high single-digit to low double-digit returns with dividend yields.

A 'barbell' approach: combining high-conviction tech names with stable, quality compounding investments.

Risk-Reward Ratio in Tech as Geopolitical Risks Increase

Risk-Reward Ratio in Tech as Geopolitical Risks Increase

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